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Despite Law, Job Conditions Worsen in China

DONGGUAN, China — Liu Pan, a 17-year-old factory worker, was crushed to death last April when the machine he was operating malfunctioned.

Somehow Mr. Liu became stuck in the machine, his sister Liu Yan recalled during a tearful interview in a village near the factory.

“When we got his body, his whole head was crushed,” Ms. Liu said. “We couldn’t even see his eyes.”

Investigating the accident, inspectors found a series of labor and safety violations at the factory, Yiuwah Stationery, which supplies cards, gift boxes and other paper goods to Disney, the British supermarket chain Tesco and other companies.

In a statement issued Wednesday, Disney said it had instructed its vendors and licensees to “cease new orders of any Disney-branded products in the Yiuwah factory” until conditions were improved.

A spokesman for Tesco said that company was also working to improve conditions at the factory.

While the accident at the Yiuwah factory was particularly tragic, working conditions elsewhere are worsening. A year and a half after a landmark labor law took effect in China, experts say conditions have actually deteriorated in southern China’s export-oriented factories, which produce many of America’s less expensive retail goods.

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Workers exiting the Yiuwah Stationery factory in Dongguan. Safety has been neglected in Chinas southern manufacturing regions, experts say.Credit
Ryan Pyle for The New York Times

With China’s exports reeling and unemployment rising because of the global slowdown, there is growing evidence that factories are ignoring or evading the new law, and that the government is reluctant to enforce it.

Government critics say authorities fear that a crackdown on violators could lead to mass layoffs and even social unrest.

“The economic downturn has given regulators the perfect excuse to ignore the law,” says Zhang Zhiru, director of the Shenzhen Chunfeng Labor Dispute Service, a nonprofit group that supports workers. “I don’t see any fundamental change.”

But workers are fighting back. Earlier this month, the government said Chinese courts were trying to cope with a soaring number of labor disputes, apparently from workers emboldened by the promise of the new contract labor law.

The number of labor disputes in China doubled to 693,000 in 2008, the first year the law was in effect, and are rising sharply this year, the government says.

The law requires that all employees have a written contract that complies with minimum wage and safety requirements. It also strengthens the monopoly state-run labor union and makes it more difficult for companies to use temporary workers or to dismiss employees.

Western companies that outsource to China say they have stepped up their monitoring of supplier factories to ensure they comply with the law. But they acknowledge that ensuring compliance is challenging in China.

A spokesman for the local Dongguan government here said that they were strictly enforcing the new law. But in interviews, some factory owners acknowledged that they were seeking ways to get around it, complaining that the law’s regulations were too costly and cumbersome.

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Liu Pan, pictured on his ID card.Credit
Liang Qing

Lawyers say some local governments have issued their own competing rules or interpretations of the law that weaken it, to aid factory owners.

“Many local governments want to develop their own versions of the law,” says Liu Cheng, a professor of law at Shanghai Normal University and one of the law’s authors.

China’s huge and complicated labor market has long thrived on cheap labor and lax regulation. In recent years, labor rights advocates say they have seen incremental gains for workers. But they say there are growing signs of labor abuse. They point to a string of recent cases, like one several weeks ago in which police in southern China’s Anhui province said they had freed 30 mentally handicapped workers from what they called “slave conditions” in a brick kiln.

On the same day, police said a fire in the dormitory of an illegal factory in southern Guangdong province killed 13 female workers and seriously injured four others.

A few weeks earlier, 7,000 workers went on strike at a factory that supplies some of the world’s biggest technology companies, saying they were being cheated on overtime wages and fed unsanitary food.

Experts say cheating workers on wages, forcing them to log up to 200 hours of overtime a month and denying them health benefits is commonplace in China.

Many factories are violating not just the new contract labor law, but also a 1994 law, which covered a broader set of labor and wage practices, they said.

“The employment contract in many factories here is a mere scrap of paper,” says Liu Kaiming, director of the Institute of Contemporary Observation, a labor rights group in Shenzhen. “Here is a common trick: The factory signs contracts with 1,000 workers but actually they’ve hired 2,000. The factory reports to the government saying they have 100 percent of their workers registered.”

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Liu Pan, 17 years old when he died, began working at 15.Credit
Liang Qing

Heather White, a consultant who has inspected factories in China for Tommy Hilfiger, Polo Ralph Lauren and other big companies, says many exporters evade the law by subcontracting to so-called shadow factories, which operate under illegal conditions.

“The market is penalizing anyone who complies with the law,” she says, meaning their products are more expensive. “And so many companies are subcontracting” to shadow factories.

Labor rights groups that specialize in sneaking into Chinese factories and documenting their flaws say exporters’ multinational clients are also responsible for their suppliers’ practices.

“They are blatantly violating the labor law,” says Charles Kernaghan, director of the National Labor Committee, based in Pittsburgh, which last February issued a scathing report on a factory making keyboards for big tech companies. “They’re forcing people to work 12-hour shifts. Their overtime far exceeds the legal limit.”

But factory owners say that labor law enforcement has been weak and selective for years, and changing the rules now could lead to chaos, drive up prices and force many factories out of business.

“The government hasn’t given us time to adjust,” says Huang Zhenyuan, vice president of the Taiwan Merchant Association of Dongguan, which represents thousands of factories. “When we came to China there was no legal environment. Now all has changed; it’s too sudden.”

Because of the downturn, 20 million migrant workers have already lost their jobs, Beijing says. The government recently put rules in place restricting factories from making large-scale layoffs without giving the government notice.

But on an individual level, the struggle between having a job and economic security, and safety and personal dignity can be wrenching.

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Liu Pan, the worker crushed to death, was hired shortly after he had turned 15. He operated a giant machine that turned out boxes in a plant that Disney concedes had recently passed third-party audits. His salary was about $175 a month.

Workers found his mutilated body stuck in the machine on the afternoon of April 5.

Michael Li, a senior manager at Yiuwah, says the accident was not a reflection of labor conditions at the factory. He also said a Chinese government official helped manage the factory.

But China Labor Watch, a nonprofit group based in New York, says it investigated conditions at the factory shortly after the death and found widespread violations of the labor law, including the hiring of children as young as 13, forced overtime and the failure of many workers to sign labor contacts.

In a statement, Disney said only about 5 to 15 percent of the goods produced at Yiuwah were made for Disney and that Yiuwah had committed to correcting problems there.

“However, if improvement within acceptable and agreed upon time frames is not achieved,” Disney said it would stop doing business with the factory.

Yiuwah offered $22,000 to compensate for Mr. Liu’s death, his family said.

Liu Hong, Mr. Liu’s father, does not even know how to begin to measure such compensation.

“I’m falling apart,” he said as his wife tried to calm him. “We are in the lowest class. So I still don’t know if it’s the highest compensation. I still wonder, because a life, a young life, is only worth $22,000?”